Before the COVID-19 pandemic and the resulting special rules adopted in response we had a complex situation in Ontario construction. The new Construction Act came in to force in two installments. Construction contracts continue to be performed in Ontario which are governed by three distinct regimes: where procurement for the contract was begun prior to July 1, 2018, the former Construction Lien Act applies; where procurement for the contract was begun after July 1, 2018 but before October 1, 2019, the Construction Act as proclaimed in force July 1, 2018 applies; and where procurement for the contract was begun after October 1, 2019, the Construction Act as proclaimed in force October 1, 2019, applies. The date of the contract and the date or dates of the subcontracts are not relevant to the determination of which legislation applies.
The time-period for preservation on of claims for lien and the time following publication of a certificate of substantial performance for the release of holdback money is 45 days or 60 days, depending on the legislation that applies. The 28-day period for payment of a contractor under the prompt payment regime applies only to those contracts, and subcontracts under those contracts, for which procurement was begun after October 1, 2019.
In response to the COVID-19 pandemic, the Government of Ontario acted to suspend the running of limitation and procedural time-periods. Acting under the Emergency Management and Civil Protection Act the Ontario government issued O. Reg. 73/20 that suspended all limitation periods and litigation and other dispute-oriented time-periods for at least 90 days retroactively to March 16, 2020. This included a suspension of the running of time-periods for preserving and perfecting claims for liens under the Construction Act.
This had an unintended result: with the suspension of the time-periods for preservation of liens, the time for release of holdback money was also extended. As a result subcontractors and suppliers waiting on the release of holdback money were left in limbo.
On Thursday, April 9, the Ontario government announced its intention to amend O. Reg. 73/20 to exempt the Construction Act from the suspension of limitation and procedural time-periods. The amendment is to become effective April 16, 2020, with the result that any time period under the Construction Act which had begun and was running prior to the effective date of O. Reg. 73/20 on March 16, 2020, would be deemed to have been suspended March 16, 2020, and to begin to run again on April 16, 2020.
In the current environment construction industry participants must carefully review their contracts and subcontracts to understand the applicable time-periods for preservation of claims and payment of holdback.
